Banks expand loans size by 57% to N37.2trn

Amidst tight monetary policy and economic contractions, loan portfolio of leading Deposit Money Banks in Nigeria expanded by 57 percent to N37.17 trillion in 2023 against N23.68 trillion recorded in 2022.


The large credit growth was driven by Access Bank, Zenith Bank, First Bank, Guaranty Trust, United Bank for Africa (UBA) Plc, Fidelity Bank, GT Bank, Stanbic IBTC, Sterling Bank, Wema Bank and FCMB.

Details of the loan books showed that tier-1 banks dominated the combined portfolio recording the highest value and growth rate.


Access Bank recorded the largest loan portfolio with N8.04 trillion, while Zenith Bank grew its portfolio to N6.56 trillion, and First Bank increased to N6.36 trillion.


United Bank for Africa (UBA) Plc increased its loan book to N5.23 trillion, while a tier-2 bank, Fidelity Bank Plc, broke into the big five bracket with N3.09trillion loan size forcing GT Bank into sixth position with N2.48trillion.


Also another tier-2 bank, Stanbic IBTC Bank, led the industry growth rate with a 68.6 percent increase in its loan book to N2.03 trillion in 2023, followed closely by a tier-1 bank, First Bank, with 68 percent increase and UBA placing third in growth rate recording 66.7 percent.


Agusto & Co, a firm of financial analysts, in a 2023 Banking Industry Report, noted that the banks took advantage of the rising liquidity occasioned by the eradication of the ‘arbitrary’ cash reserve ratio (CRR) debits to grow their loan books.

The firm’s report stated: “Following the inauguration of President Tinubu, the new administration has implemented several reforms aimed at reversing prevailing macroeconomic imbalances.

The reforms including the removal of the petrol subsidy, exchange rate harmonisation, tax reforms and restoration of a methodological framework for calculating the cash reserve requirements (CRR) provide growth opportunities for the Industry.

“For instance, we believe many banks will take advantage of rising liquidity following the eradication of arbitrary CRR debits to grow the loan book, especially since the working capital needs of businesses continue to rise given the weakening domestic currency and other inflationary pressures.


“We expect that the new loan disbursements will largely flow to traditional sectors including manufacturing, oil and gas and general commerce amongst others and resilient players given the volatile operating terrain.

Nascent sectors such as renewable energy, health and gender-based businesses will also continue to gain.”
Analysts at Cardinalstone, an investment banking firm, said: “This credit growth was largely propelled by the impact of currency devaluation on banks’ foreign currency loans. To our minds, 2024 is likely to be a year of correction for credit growth due to the sustained macroeconomic issues in the country.

“Banks are likely to retain restrictive credit lending policies, targeting sectors and obligors that are relatively more creditworthy. Hence, we expect full year 2024 loan growth to revert to a 4-year mean of 19.9%.”

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